Vallourec S.A.

Good morning and welcome to Valorex Q3 2025 Result Presentation hosted by Philippe Guillemot, Chairman of the Board and Chief Executive Officer, and Sacha Diber, Chief Financial Officer. For the first part of the conference call, all participants will be in listen-only mode. During the question and answer session, you may ask questions by joining the conference call and dial Q5 on your telephone keypad to enter the queue. And now I would like to hand the call over to Conor Lina, Vice President of Investor Relations. Please go ahead, sir.

Thank you. Good morning, ladies and gentlemen, and thank you for joining us for ValorX Third Quarter 2025 results presentation. I'm Conor Lina, Vice President of Investor Relations at ValorX. I'm joined today by ValorX Chairman and Chief Executive Officer, Philip Guillemot, and ValorX Chief Financial Officer, Sasha Bieber. Before we begin our presentation, I would like to note that this conference call will be recorded. A replay will be available following the call. You can find the audio webcast on our investor relations website. The presentation slides referred to during this call are also available for download here. Today's call will contain forward-looking statements. Future results may differ materially from statements or projections made on today's call. The forward-looking statements and risk factors that could affect those statements are referenced on slide two of today's presentation. These are also included in our universal registration document filed with the French Financial Market Regulator, the AMF. This presentation will be followed by a Q&A session. I will now turn the call over to Philippe Guillemot.

Thank you, Conor. Welcome, ladies and gentlemen, and thank you for joining us to discuss BALUEC Southwater 2025 results. In the third quarter, we delivered solid results once again, with group EBITDA margin rising to 23%, the highest level since the first quarter of 2024. With this, we have now maintained our EBITDA margin around the 20% level and generated positive cash flow every quarter for the last three years. Our strategic initiatives are paying off, demonstrated this quarter by the closing of the tubes profitability gap versus our primary peers. You can see today's agenda on slide 3. I will move to slide 5 to discuss the highlights of the third quarter. Our third quarter results were in line with our expectations. EBITDA of 210 million euros was at the midpoint of our guidance range. We recorded a very strong net income of 134 million euros. Our net income has recently been aided by the execution of strategic projects, in this case, the sale of Serimax. Group EBITDA margin was 23%, driven by the robust performance in tubes. Tube's EBITDA pattern improved by more than 25% sequentially to 621 euros. Total cash generation was positive for the 12th straight quarter. We reduced net debt to 140 million euros. Looking ahead, we expect fourth quarter EBITDA to range between 195 and 225 million euros. Our full year outlook confirms the expected second half versus first half EBITDA improvement. We have seen some positive trends in the business despite a volatile background environment. In the US, our fully integrated domestic operation is benefiting from high levels of customer demand. Recent bookings have been strong. In Brazil, we secured a major contract with Petrobras, which will expand our OCTG market share. This contract further demonstrates Valuate's ability to deliver high-value solutions from our domestic manufacturing base. Meanwhile, in select markets in the Eastern Hemisphere, we have seen delays in some customers' activity. These delays will result in some orders being invoiced in 2026, later than initially planned. This delay is embedded in our fourth quarter outlook. Turning to capital allocation, we further optimized our capital structure in the quarter, redeeming 10% of our 2032 senior notes. In addition, today we announce a special meeting for holders of Valourec warrants. The key proposal will be to allow Valourec to satisfy its warrants obligations with existing or new shares. The current terms of our agreement only allow the delivery of new shares. This will enable maximum flexibility in our capital return options over the next year. Let's move to slide 6. The two goals of the new Valorec plan were to crisis-proof our business and deliver best-in-class profitability. Today, I am pleased to announce that Valorec has achieved another major milestone. In the third quarter, we fully closed the margin gap versus our primary fear. This is thanks to our core principle of value over volume and our relentless focus on operational excellence. We also continued our strong trend in return on invested capital in Q3. I assure that our journey will not stop here. We have many initiatives underway to further improve our return on invested capital. Let's turn to the current market environment on slide 8. We start here with the US OCTG market. While crude prices remain volatile, oil draining activity bottomed in August. The oil recount increased modestly through the third quarter. Gas-directed draining has stabilized at the healthier level after rebounding in H1. Recent strength in U.S. gas pricing could drive higher activity. OCTG consumption per rig is also a tailwind. Since 2015, OCTG intensity per rig has increased nearly 5% per year, as shown on the right-hand chart. The drivers are clear, our customers are drilling longer laterals and the rings are drilling at faster rates. The push towards longer laterals has driven strong demand for our high torque connections. Because of this, one of our return enhancing initiatives is the construction of our new threading line in Ohio, which we announced earlier this week. This line will serve a strong and increasing market demand for high-torque connections with a high return on capital. Let's move to slide 9. On the left side, you can see the import trend. While recent data is unavailable due to the US government shutdown, we believe imports have started to decrease. This is particularly true for seamless products. Our order intake has been robust in recent months, reflecting healthy demand level and an improvement in our market share. This is likely at the expense of some of these imports. Seamless post pricing was stable in Q3, with the latest survey showing a slight increase. We have seen divergence in welded versus seamless pricing in some recent industry surveys. This validates the differences in import economics we highlighted last quarter. Let's move to the international OCTG market on slide 10. Demand, as measured by the rig count, remains at the LC level in most regions. On the left, we highlight that activity trends have not been uniform across key geographies. Middle East activity, particularly offshore, has shown a downward trend over the past several months. This was particularly driven by activity reductions in Saudi Arabia. Our premium portfolio is outperforming the overall market. Still, we have seen some delays in customer activity in select countries, especially in the Middle East and North America region. Meanwhile, activity in other international markets has moderated very slightly. Many of our core markets, such as Brazil, have been stable and look set for further growth. Market prices, according to Reichstag Energy, are consistent with a change in activity. There has been softening in the Middle East relative to offshore markets like North Sea. Our product mix is skewed toward more premium grades and connections at this index. Our pricing has remained more stable, including in the Middle East. Looking at the long term, our key international customers continue to advance ambitious capacity growth plans. This will inevitably lead to higher draining activity and higher OCTG demand well into the future. The structural shift towards increased gas and unconventional fields and the resilient development of deep water basins is a challenge. These resources require high-tech solutions, including new fit-for-purpose solutions that we are developing today. Before I hand over to Sacha for his last participation to Valourec's analyst call, I would like to warmly thank him for his contribution next to me to the successful execution of the new Valourec plan, which I announced in May 2022, and that Sacha will recap in his presentation. We all wish him the best for his future challenge in Germany.